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TTIP: Trade Wars and Imperialist Manipulation

On 11 October demonstrations organised by NGOs and charities like 38 Degrees, the World Development Movement and War on Want took place throughout Europe (in Hamburg, London, Ljubljana, Berlin, Madrid, Helsinki, Vienna, Paris) against the proposed so-called Trans-Atlantic Trade and Investment Partnership or TTIP. Many heard about TTIP for the first time that day. Many more still don’t know what it is despite the efforts of its opponents. Here we will look at what is being planned, what it means for the working class and whether the opposition to TTIP has really grasped the full significance of what is happening.

The Economic Crisis

We continue to suffer the ravages of capitalism’s crises – even though our lords and masters would have us believe otherwise. We have been continually told that we are gradually coming out of the recession caused by major collapses within the financial markets and the subsequent collapses of entire economies – particularly within the European Union, like Greece, Spain, Portugal and Ireland. It does not feel like it. And even our ruling classes don’t really think the crisis is over.

Governments are employing a whole raft of measures to deal with the problems at hand for the capitalist class. The Irish government has just finished taking steps to deal with the 'double Irish' – the anomaly relating to its tax laws which saw major corporations basing particular parts of their non-US operations in the Irish Republic so that they could enjoy lucrative tax breaks. Such companies have included Starbucks, Google, Adobe, Apple, Facebook, Microsoft, General Electric, IBM, Yahoo and many more. The 'double Irish' was a series of measures often coupled with other steps, such as the 'Dutch sandwich', so that further tax breaks could be enjoyed by firms operating transnationally. The Irish ruling elite have now begun to close such loopholes, partially in response to depths of their own problems of falling state revenues following the recession/crisis. Neither the double Irish nor the sandwich, of whatever origin, are palatable.

“Quantitative easing” (creating money to give to the big banks to rebuild their balance sheets) has been no good to us either. It has not even been good for the health of the capitalist system as a whole. Few industrial capitalists are ready to invest at the current rate of profit on offer. Only those in certain niche industries have done so. And as quantitative easing is being phased out in the Anglo-Saxon economies with them claiming a recovery that has only seen the mega rich get richer and everyone else poorer. The system is still limping along not recovering and elsewhere in the EU and Japan (Abenomics) quantitative easing is only now being adopted. What the capitalists need to do is have a massive devaluation of existing capital in order to restart a cycle of accumulation that effectively ended as long ago as 1971. None of them wants to devalue their own capital and so financial speculation and increasing war (often fought by proxies) is plaguing the planet. But this is small beer and what they really need is a widespread devaluation on the scale of the Second World War. The conditions for that are not yet in place but that is the long-term prospect of the system’s contradictions.

In the meantime the one bit of capital they can devalue immediately is that of variable capital, or to put it in everyday terms, our wages and standard of living. This is why the working class who have had nothing to do with the financial sector have born the brunt of its crisis. If budget deficits have become unsustainable, due to state support for a financial sector the entire system is dependent on, then the deficit must be cut in other ways. Real cuts to state finance for the unemployed, the low paid, and the services such as health and education on which we depend, are the order of the day. Cuts in wages and social services will increase profitability of capital if they are accompanied by capital investment which employs productive workers and produces surplus value. This prevents the shrinking of demand. The real problem for capital is the lack of investment. The capitalists are sitting on mountains of cash which they will not invest. The reason they fear to invest it is because the rate of profit is too low. These cuts have not solved the problem but actually making the crisis worse by restricting demand even more. After all, who are the people who buy the commodities the system produces but the very workers who also make them. Already up to our necks in debt we can no longer be the “consumers” they thought they had converted us into over the last few decades. Despite all the heady neo-Keynesian talk from trades union leaders etc. that there is money awash in the state coffers, the truth is that the game of debt-fuelled expansion is finished (although it won’t stop them trying to keep it going in one form or another). The only reason the system staggers on is that globally the working class has swallowed “austerity” in the hope that one day soon things will get better. But even our leading financiers think that not only is this something for a distant future, but that there is more likely to be another collapse first.

It would seem capitalism is in a historical cleft stick. All the contradictions that Marx predicted, but which we were told were things of the past, keep coming back to haunt it. So our capitalist class needs a good wheeze, a new direction, to try to wriggle out of the current stagnation.

Trade as Imperialism

In the epoch of concentrated monopoly and finance capitalism one of the main focus of state activity is to try to create opportunities for the monopolistic multi-nationals (also known as trans-nationals) which dominate the global economy to lead the drive for accumulation and re-establish profitable operations. There is nothing new in a world dominated by such firms, as we have seen over the last few decades. No-one can forget how a chemical leak from a Union Carbide plant killed between 5,000 and 20,000 people as well as maiming 5 times those numbers in Bhopal in India exactly 30 years ago. None of these people received any compensation from Union Carbide or its successors. The plant has never even been cleaned up and remains toxic to this day. The Indian state has been impotent to get any redress in the face of the obfuscation of the US-based conglomerate. This is not an isolated incident. The multinationals, backed by their own imperialist states, have been able to impose their wills on the weaker states everywhere. By promising inward investment they get massive concessions in their interests. This has often worked to the disadvantage of the local population, as we can see by looking at the operations of Monsanto in places from Guatemala to Ghana. In Ghana farmers are fighting a proposed Plant Breeders Bill.

The proposed legislation contains rules that would restrict farmers from an age-old practice: freely saving, swapping and breeding seeds they rely on. Under the laws, farmers that use seed varieties claimed under new intellectual property rights by individuals and companies anywhere in the world risk hefty fines or even imprisonment. - See more at: newint.org

Monsanto and other US agribusinesses have played the same game around the world for years. They did get a setback in Guatemala where the Mayan people’s resistance managed to get a law passed last June to give Monsanto intellectual property rights over corn seeds repealed in September.[2] The Mayans’ fight was against the Guatemalan Government’s Decree 19-2014. This was written to comply with the requirements of the Central American Free Trade Agreement. Like the North American Fair Trade Agreement, (NAFTA), the agreement opens up the economies of Central American countries and the Dominican Republic to cheap imports from the United States. But that was only one victory for local people and it is a war that is not yet over and is global. The classical example comes from India where years ago US producers managed to acquire the intellectual property rights for basmati rice seed. This has allowed them to replace local seed with genetically modified seeds and at higher prices. According to the Guardian the consequences have been dire.

More than 270,000 Indian cotton farmers have killed themselves since 1995. Campaigners say a contributing factor may be the high price of _genetically modified seeds_ flooding the market, which is piling pressure on poorly paid growers, _forcing many into a cycle of unmanageable debt.[3]_

Even in the USA the multinationals dictate the terms of the game. Monsanto has taken 850 US soyabean farmers to court (to be fined) for not using their GM seed (700 of them could not afford to be sued so settled out of court). These are just a couple of examples among a multitude all over the world. These sort of practices are the models for the Trans-Atlantic Trade and Investment Partnership currently under negotiation between the USA and the EU

So what is so different about what is going on now? After the Doha Round of the World Trade Organisation talks failed to “liberalise" trading rules in 2006 there has been little attempt to deregulate to make it easier for the multinationals to make money. However, after 8 years of global economic stagnation in which the capitalists have exhausted all the possibilities from printing money, speculation, currency dodges, quantitative easing and austerity and yet the world economy remains stubbornly unmoved what else can they turn to? Promoting your own monopolies and locking whole states into a statutory trading framework is just the latest way to boost profits and get out of the crisis. However it is not just about that. It is also about the shifting imperialist rivalries between the various capitalist powers to defend their own interests. Not least among them is the United States. We will return to the imperialist balance of power below but we will first focus on the proposed deal between the two richest markets on the planet, the EU and the USA.

The Trans-Atlantic Trade and Investment Partnership

Obama announced in his 2013 State of the Union address that as well as pursuing the Trans-Pacific Partnership (TPP) discussions would also be advanced on new trans-Atlantic trade deals. We’ll return to the TPP later but what has been discussed between the EU and the USA in secret since then are a series of measures they hope to implement by the end of this year – the Trans-Atlantic Trade and Investment Partnership (TTIP), the Trans-Atlantic Free Trade Area (TAFTA) and Investment-State Dispute Settlements (ISDS). This was confirmed shortly after by Barroso, EC President and the first negotiations took place between EC and US officials in July 2013. Contradictory admissions have been made concerning the nature of the negotiations – on the one hand public statements have been to the effect that these efforts are to help create a new free trade area, removing tariffs, between the US and the EU, on the other it has been admitted that trade barriers are already virtually non-existent between the two. What is really being discussed is the removal of regulatory barriers restricting the potential profits of the major corporations.

An endless stream of lies has been told about these talks. The first is that they are “transparent”. Yet no details of the discussions will be allowed to become public, and all documents relating to the talks will remain secret for at least 30 years. They are only transparent for the lobbyists of the multinationals who can try to shape them in the interests of their clients. The second lie is that we will all be beneficiaries in the win-win game of more open trade. This is a scheme for economic recovery of a system founded on our exploitation. The aim of the game is to further undermine the little we have in social services which will be increasingly farmed out to the multinationals. It’s not new but in these accords it is getting more organised and systematic.

So what is the substance of TTIP?

- major corporations will be allowed not only to bid for the provision of social services and products used by them. They will, in effect, be allowed to bully their way into every aspect of the service sector. Core areas will be the provision of health, care and educational services, material and equipment provisioning for states and local bodies

- these corporations will effectively oversee the de-regulation, re-regulation and so on of a whole raft of areas overseen by governments and local bodies, this could mean food, toxic chemicals and many other area being rolled back in terms of health, safety and public protection

- guarding and enforcing all of these measures will be such bodies as Investment State Dispute Settlement (ISDS) tribunals, ad hoc bodies staffed and judged by corporate lawyers, who, have already been able to employ the flimsiest of reasoning in effecting judgements, always seemingly on the side of major corporations.

These massive corporations are always searching for new avenues for profit generation. However, since the speculative bubble burst they have been scratching around even more for new sources of profit. They have shown a keen interest in areas previously barred to them – particularly those of food production and supply, energy generation and supply, health and care services, education and the like. In addition we can add fears concerning economies such as the Bric powers, where there has been little or no penetration into many of these economies on the part of the major corporations. Here they look to build a new system with which to beat down their strongholds and generate vast new revenues through the ‘unfair competition’ protected and policed by such tribunals as ISDS.

The sort of scenarios we can expect once agreement is reached can be instructuvely compared to the recent experience of the Slovak government. It was beaten down by the Dutch insurer Achmea over its attempts to make healthcare essentially free to its population. Achmea acquired 29 billion euros from an action taken against the Slovak state in the World Banks International Centre for the Settlement of Investment Disputes (ICSID). A similar comparison has also been made by War on Want between the proposed TTIP and the actions of Veolia in Egypt. In October 2011 Veolia abandoned its 15 year contract to deal with waste disposal in Alexandria because the Egyptian government had acted on decisions to keep public and private sector pay in line with inflation. Veolia is seeking damages from the National Wage Council on the grounds that its profit margins were adversely affected by such steps. The US has been the key promoter of ICSID’s ISDS-type tribunals. Although it has mainly been US companies, such companies as Philip Morris, the tobacco giant, gaining from the pronouncements of these tribunals, others have also gained like the Swedish energy company Vattenfall, the petro-chemical giant Ethyl and the Canadian company AbitibiBowater. The governments of Argentina, Uruguay, Canada (at the hands of a Canadian company via a US office), Australia, Ecuador and many more have had to pay compensation to these firms via these tribunals.[4]

Impact on the Working Class

According to its General Secretary the European Confederation of Trade Unions will support TTIP if the clauses on ISDS are dropped[5]. But with or without ISDS the working class can expect wholesale changes to their lives if this comes into force – assembly line “education” even worse than today’s, bloodless healthcare not fit for purpose unless you are wealthy enough to afford private means, a flood of food products not fit for any plate ousting local production from the market, an overall environment poisoned by rapacious corporations – literally, through unsafe practices and cheap poisonous materials and processes.

We have already seen a preview in NAFTA. In 1994 the North American Free Trade Area came into force. The US government had promised that this agreement linking the US, Canada and Mexico would help to create jobs. It has been estimated that it has caused the loss of around 1 million US jobs, contradicting the promises made by the US government to bodies such as US unions and others. TTIP supporters claim that employment across the EU will grow but the World Development Movement estimates that 600,000 jobs will go whilst trans-national corporations will be effectively employing slave labour in various countries. Can we really believe that these proposals will bring the promised growth? Or will we see simply a growth in jobs in places where the profiting major and trans-national corporations can foist the worst and cheapest of conditions upon workers, paying them the least possible rates, then providing the lowest standard products and services upon the newly 're-regulated' markets.

We are told by a variety of officials from the EU that public services would not be affected. We are told that the World Trade Organisation's General Agreement on Trade in Services would exclude those services etc. 'supplied in the exercise of governmental authority' but the European Commission has stated repeatedly that this offers no protection to the majority of services offered by governments and local bodies because of its very tight wording. Lies once again. Indeed the European Commission has now stated that only services relating to security and air traffic control are to be exempt from inclusion from this assault by corporate capital. The aim of their game it to turn every last vestige of the service sector into the commodity form thus reaping ever greater profits for big capitalists ventures. And to guarantee their property rights the proposed agreement will prevent any future governments from taking any services back into public control once they have been privatised.

The EU is also hoping to further dilute regulation of world financial rules so that key players such as the City can move towards a hoped for replay of its glory years of speculation and invention of new financial machinery to magically conjure up new piles of capital. Part of this would be further access granted to European financial institutions to financial services markets within or essentially controlled by the US. A key element would be an alteration to Obama's Dodd-Frank Act.

No-Global or No Capitalism?

All the above criticisms have been loudly made by the opponents of the TTIP and other similar schemes that we listed above. They focus on how secretive, undemocratic and elitist all these measures are, and they are right. There is little doubt that this great blow for “free trade” will further undermine living standards of workers everywhere. But we have to say to them two things. In the first place this is only the logical extension of the concentration and centralisation of capital analysed by Marx as one of the central tendencies of the capitalist mode of production. Multinationals, the too-big-to-fail banks, monopolies and globalisation, neo-liberalism as well as imperialism are only the outcome of that deeper process. And this is where we say the argument against “global” capitalism is mistaken. It is only an argument about the symptoms not about the cause of the disease. The real issue is the capitalist system itself. All talk of lack of transparency, lack of democracy or secrecy or the unfair competition of multinationals and declining sovereignty of this or that capitalist state implies that the system can be reformed and that a “fairer capitalism” is possible. This flies in the face of 200 years of history. The issue is thus wider than one of new trading arrangements. It is about the prospects of a decaying capitalist system and a world working class which has borne the brunt of capitalism’s failures over the last 4 decades. In fact, for all its enormous development of the productive forces, capitalism has today run its course. Its continuous existence relies on the immiseration of much of humanity. A third of the world’s population continues to live at the margins of existence whilst a greater proportion of the wealth created by wage workers ends up in the hands of a smaller and smaller minority. Permanent wars are spreading as fast as ebola (itself a capitalist scandal) across the planet from Central Africa to the Middle East and beyond. The UN recognises that at least 50 million people are “displaced” by capitalism’s conflicts.

Talk of war brings us to the second point that our TTIP opponents tend to ignore. What they don’t see is that TTIP is part of a wider strategy on the part of the “West” headed by the US to maintain its historic domination over the global capitalist economy. On the purely economic level TTIP can be seen also as a step taken by capitalist core economies as a partial safeguard against emergent economic powers including those of China, India, Russia, Brazil and South Africa – the Bric or Brics nations. Wherever these governments do not adhere or even pay lip service to the principles of TTIP it threatens to cut them out. Under decadent capitalism however there is little left that is “purely economic”. Or as the Jacques Delors Institute put it

“Trade policy may have its own rationale, its own language and its own sphere of autonomy, but it remains tied to broader strategic issues. Trade policy is inextricably bound to soft power: its importance and its autonomy tend to decrease when hard power takes over, as in wartime or during the Cold War (during which, trade relations were used as tools in the confrontation between the two blocs). At other times, however, trade policy can become a vehicle for strategic shifts.”[6]

This precisely underlines the fact that behind these new trading agreements lie the foreign policies of the United State and its Western allies. Whilst TTIP will cement that Western alliance amongst the leaders of the USA and the EU the whole package of deals which also include the Trans-Pacific Partnership (TPP) are designed to weaken “those emerging nations that pose a danger for European civilisation”. (Francois Fillon, former Gaullist Prime Minister of France in May this year). Others have been blunter. The aim of the game is to use TPP and TTIP to “agree common regulations which could subsequently be imposed on the Chinese” (Alain Lamassoure French MEP)[7]. Famously China and Russia (and their friends like Iran) have been pointedly excluded from these talks. As a result China and Russia who have been increasingly thrown into each other’s arms by their common attempts to redress the balance of world power both economically and strategically.

We have written at length[8] about Obama’s “pivot to Asia” as an attempt to consolidate its traditional allies there whilst combating Chinese advances across the maritime trade routes towards the West. As the Delors Institute also points out

“The United States, thanks to its geographical position, has always accorded vital strategic interest to

access to global markets, in particular through maritime routes.”

Indeed it could be argued that the basis of the antagonism of the USA in the Cold War was not that the USSR (and China) represented a rival system (and they were certainly not communist) but that the USSR had, with its satellites, a sizeable non-convertible currency zone into which the dollar could not penetrate. And the almighty dollar has been at the root of American power since the Second World War. It is de facto the world’s reserve currency. In 2003 on the eve of the invasion of Iraq three quarters of all foreign reserves held by governments were in dollars and 80% of world trade was in dollars. It allows the US to print money (electronically these days) without consequence since the dollars circulate around the world. All it means is that the holders of dollars are holders of US debt, a debt which they cannot redeem with damaging their own financial reserves. Until 1971 the dollar was as “good as gold” with an ounce of gold being fixed at $35. But with the post-war boom at an end and the Nixon regime facing a mounting deficit it was decided to float the currency. This increased global financial instability but as the US Treasury Secretary at the time said to finance ministers gathered in Washington “it’s our currency but it’s your problem”. Despite the introduction of the euro and various attempts to break away from the dollar (one reason for the overthrow of Saddam Hussein) the dollar is still the world’s major trading currency. Even today the US dollar acts as the currency of choice for over 60% of the world’s trade. For the US though this is a decline and arresting that decline has been the basis of US foreign policy since the notion that “the new world order” was not yielding the dividends that the US hoped for 25 years ago.

“Free trade” agreements are considered to be the best way to do this at the present time. They have vocal support from the likes of Pascal Lamy the former head of the World Trade Organisation when the Doha Round of trade talks collapsed before the speculative bubble burst. He argues, like most advocates of free trade, that trade brings interdependence and therefore less likelihood of war. Its a dubious notion but there is no doubt that tariff wars preceded both world wars of the twentieth century. However TTIP, TAFTA and TPP or any of the other schemes now being hastily prepared are not really about free trade. They are about protecting the Western alliance against those “emerging nations” like the BRICs which refused to go along with the US’ demands at Doha. These arrangements exclude China and Russia and are even in direct competition with other bodies which exist to promote trade in Asia but which includes a wider number of countries. China and Russia have set up their own Shanghai Cooperation Organisation which includes the two major powers plus Kazakhstan, the Kirghiz Republic, Uzbekistan and Tadjikistan, with India, Iran, Pakistan, Mongolia and Afghanistan as observers and Belarus, Turkey and Sri Lanka as dialogue partners plus Turkmenistan as a “guest”. China is clearly working to overturn US dominance of the global financial system which is the legacy to the 1944 Breton Woods agreement. Her aim is to establish her currency, the Renminbi as an international currency, which could become an alternative to the dollar and to set up financial organisations which undermine the IMF and the World Bank. The establishment of the BRICS development bank in July, with its headquarters in Shanghai, the Asia Infrastructure Investment Bank and moves to establish a development bank of the Shanghai Co-operation Organisation are indications of counter moves to the US. Obviously none of these trade alliances are totally mutually exclusive and many smaller powers try to be in every game they can but what we are seeing is the beginning of the rivalry between Russia and Europe and China and the US taking on a more formal shape. Far from being steps towards greater world trade and world security the TTIP and TPP are expressions of Western imperialism.

This is why they are defended so consistently by leading institutions and those at the top of the capitalist tree in the EU and USA. For them job losses or lower paid jobs means greater productivity and more profit. For us it will only add to the misery already felt over the current crisis. However we need to recognise that these trading partnerships are only the outward phenomena of a much deeper trend. This is the trajectory the capitalist system as a whole is taking. The aim is not only to immiserate us in the short term but to eviscerate us in the long term. Neither austerity nor these deals will revive the capitalist system and when this failure becomes clear then this incipient trade war will become something altogether more unpleasant. Socialism or barbarism remains the historic choice for humanity.

In evidence

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Agenda

26 Jan
Dorking Public Meeting

NO WAR BUT THE CLASS WAR

PUBLIC MEETING/DISCUSSION

As capitalism’s economic crisis deepens our rulers are determined to make the working class pay for it by increasing exploitation and reducing wages and living conditions.

All across the world, the capitalists and their political puppets are also trying to prevent any united working class fightback by widening divisions in the working class, such as nationality, race, ethnicity, religion, gender and sexual preference. The xenophobia whipped up before and after the Brexit campaign, the Trump election campaign and the election campaigns of nationalist governments in Hungary and Poland are a few recent examples of what is happening and what is to come.

At the same time national states are trying to push the crisis onto capitalists of other states or blocs of states by trade wars. And history tells us that trade wars are the prelude to shooting wars. While imperialist proxy wars continue to rage in the Middle East, Africa and Eastern Europe, and while a new conflict with Iran is being stoked up, increasingly intense global conflicts are being prepared.

Nationalism is the main tool being used to recruit workers to support their rulers in these wars. No faction of the capitalist class is worth supporting and none is “a lesser evil”! The alternative is not to do nothing. There are already voices being raised under the banner of “No war but the class war!” to challenge the fate that the capitalists are preparing for us.

Join them in a public meeting to find out more and make your own contribution: